Money Musing

You may have noticed that the media is making a big deal about the economy. If so, you are probably aware that, as usual, the guys on TV are not well educated about how the economy works. I guess High School for the Visual Arts and Morally Impaired never got around to adding Economics to the curriculum. But the economy is not really that hard to understand, provided you have the right foundation of knowledge. And when you understand the economy in context, all the whining and moaning becomes not merely annoying, but the signature of the idiot.

Let’s start with Free Trade. The middle class American lives pretty darn well, all things considered. In fact, no one on the planet a century ago had it as good as ordinary folks do today. The reason, putting it bluntly, is free trade. You see, ever since the first merchant figured that it was ridiculous to expect every single person to individually provide everything he needed for himself, and that with a little organization and a decent chance to let folks make their own deals, everyone could benefit and live better. Shoes, for example. Ever try to make your own shoes? I remember we did something like that in Indian Guides, making our own moccasins which hurt our feet because they were too loose and gave no support or traction. Turns out training a person to make and repair shoes for everyone else worked out much better. Same thing for iron smithing; not everyone is able to make their own nails and horseshoes and so on, so it makes sense for one or two guys to do it for the whole village. And so on, everyone learning to do what they were the best at, for which service and product they were rewarded in trade. Yeah, that’s where money comes in, because when everyone already has enough chickens and cheese, barter doesn’t work out. Anyway, the word “trade” comes from that, people learning to do specialized work. And that, folks, is all Free Trade is trying to do – carry on that same very good idea to its natural extension. Different parts of the world have different resources of material and labor, and everyone benefits by producing what gives them the best advantages. Everyone knew that a while back, and it was kind of obvious – during Reagan’s years, Free Trade was West Germany and no Free Trade was East Germany, but we can still see it today, this time South Korea is Free Trade and North Korea is no Free Trade. Simple when you pay attention.

I sense the Free Trade haters are not done, though. One imagines the harangue that we are sending all our jobs away. Bollocks, that. For as long as I can remember, the classic definition of Full Employment has been an Unemployment rate of 5% or less. This is because there is always a certain amount or churn going on, the dynamics of technological development, new businesses coming in while other businesses close. And we have essentially enjoyed full employment conditions for more than a decade now. I’m not praising either President Bush or President Clinton too much on that count, because while I commend them for basically letting business work, they really did not do much else that made a difference in growth. I do think the tax cuts helped us recover more quickly from the 2001 recession, but in the main the principle for solving Unemployment is don’t do anything to impede companies creating jobs. Of course, the haters will return with the claim that the ‘new’ jobs are all lousy ones. That brings up an interesting thing a lot of workers would do well to consider; just as businesses have to review their parctices and the products they offer every so often, to make sure they are relevant and providing what the market wants, so too do workers need to watch what happens in the working world. The guys who made horse and buggy equipment had to adapt to a changing world, same for retail distribution, manufacturing, you name it. Today’s business environment is faster, far more efficient, yet also safer and cleaner ecologically than ever before. One reason why the ecology special interest groups go on about carbon dioxide so much, is because for the most part American businesses have addressed every serious contaminant and pollutant; while individual companies break the law, it is hardly the pervasive industry problem it was 50 years ago. So yes, the modern worker not only has to have a college degree where half a century ago a high school diploma was acceptable, he had also plan on continuing his education throughout his career, with industry-specific certification and effectiveness programs. But if he does that, he will continue to see his life grow in comfort and security. The middle class world I knew as a kid was one where most folks had black-and-white TVs, one car, and no real luxuries. Today, even people we call “poor” live better than that. I don’t pretend it’s easy, but the business world rewards people who improve themselves, and not those who make excuses.

No matter what anyone tells you, there is no sure way to get rich quick. There is, however, a pretty fool-proof way to get rich over time. Do the best job you can for your employer, because even if your boss is a jerk, people tend to be aware of how someone works. Always keep an eye out for how you can improve your position, but only within ethical bounds and with respect for the company (it’s a small world, and people who step on others to get ahead are more and more getting caught). Enjoy your wages, but save at least 15% of it, more if you can. Stocks pay a higher return than CDs or bonds, but if you go that way you have to accept some risk, which is not dangerous as long as you always do your homework and know the company in which you invest. Buy what you need, not all of what you want, and plan financial goals.

People with common sense have probably shrugged by now – all of this should be obvious. I am writing partly just to vent, but also because somehow obvious truths get drowned out by Gorish malcontents, so repeating the obvious seems to be a necessary civic duty.